India's premier tea organization seeks bailout from government

TNN | Aug 1, 2019, 08.28 PM IST

GUWAHATI: The Indian Tea Association, country’s premier and oldest organization of tea producers, on Thursday made a public appeal to the government seeking immediate bailout of the tea industry, which it said is sinking under the weight of recurring losses triggered by rising cost of production and stagnant prices.In the last 10 years between 2008 and 2018, the realization of tea prices has gone up by only around 4.8% (Compound Annual Growth Rate), whereas the expense on wages, which compromise around 65% of the cost, has gone up by over 10% (Compound Annual Growth Rate). The expense on many other inputs has also gone up by over 7% (Compound Annual Growth Rate).

Prices have not risen due to the mismatch in demand and supply of tea, due to shrinking consumption and growing supply. Tea production in India has risen from 878 million kgs in 2003 to 1338 million Kgs in 2018, indicating a 52% of rise in production in 15 years

The country’s tea industry, which started its journey with the shipping of 12 chests of Assam tea to London in 1838 and sold at the London auctions and now lies in deep financial crisis.

The appeal has come as sharp contrast to the last couple of ‘golden’ days, when specialty teas from the state fetched record prices at Guwahati auction.

The ITA, whose member gardens account for more than 60% of the country’s total tea production, has appealed to the government to take over provident fund (PF) contribution of workers for three years to provide relief to the industry.

The tea body also wants a ban on expansion of tea areas for at least five years “to contain over supply for five years” besides seeking substantial fund for generic promotion of tea in India and fixing minimum reserve price for tea in auction based on cost of production.

Assam finance minister Himanta Sarma responded on Twitter immediately announcing government support. “Tea Industry in #Assam is passing through a critical phase. In order to extend support to it, the Assam Assembly has passed a Bill withdrawing cess on green leaves w.e.f. April 2019. The revenue implication for govt for this will be Rs 100 cr per annum.”

Tea Industry in #Assam is passing through a critical phase. In order to extend support to it, the Assam Assembly ha… https://t.co/qKre4p1tBb

The ITA’s public appeal says, “Viability of tea sector critical for security of employment of the million plus workforce. Interventions for revival of the tea sector an urgent necessity.”

Recently a delegation of tea industry met Assam government officials, seeking intervention. The ITA appeal stated, “PF contribution for workers to be taken over by government for three years to provide immediate relief

On Wednesday last Orthodox Golden Tea tips have created history by fetching the highest price Rs 70501 per Kilogram in Guwahati Tea auction Centre. Just a day ahead a kilogram of Manohari Gold Tea on Tuesday commanded Rs 50,000 per kg.